Ginyard v. Lincoln Reserve Life Insurance

The opinion of'the Court was delivered by Mr. Acting Associate Justice R. O. Purdy. Robert Ginyard died on March 5, 1923. He had taken out two life insurance policies with the defendant respondent company, each in the sum oí $1,000, and numbered, respectively, 14986 and 16613. The first named policy was *50 payable to his estate, and the last named policy was payable to Rydia Ginyard, his wife. • An action was brought upon these two policies under separate causes of action, and, for convenience, by agreement, the causes were tried together; otherwise there would have been separate actions. The complaint contains the usual allegations in an action upon insurance policies. The answer is quite lengthy, and need not be repeated here. As to the first named policy, the respondent pleads, by way of defense, a failure on the part of the insured to pay the premium, and that the insured, having certain options in such cases, and having failed to exercise either of the options which he had, the respondent exercised the option which it had under the policy, in such 'event, to apply the cash surrender value of the policy to paid-up insurance, and that the paid-up insurance was so applied, amounting to $114, and the company notified the insured of such application of the fund on March 2, 1922, and that, after the death of the insured, the $114 was paid to Rydia Ginyard as administratrix of the estate of Robert Ginyard, and was accepted and received by her as such administratrix. A similar defense was interposed as against the second named policy, except that it is alleged that $30 is the amount of the paid-up insurance which became payable to the beneficiary upon the death of Robert Ginj^ard, and that this sum was tendered to the beneficiary, and that the company has ever since been ready, able, and willing to pay it. The case was heard before Hon. R. P. McGowan, as Special Judge, who directed a verdict for the respondent upon the first named policy, and, going into a series of calculations, directed a verdict for the appellant upon the second policy in the sum of $93.30. The appellant has appealed from the judgment as to both policies. Considering the grounds of appeal as to the policy No. 14986, payable to the estate of the insured: *51 This policy was issued September 21, 1918, and three premiums were paid, carrying the policy to September 21, 1921, but the premium falling due on the last named date was not paid. In these circumstances, within one month after such default, the insured might have surrendered the policy and have elected to take one of the following options, viz.: (a) To receive the cash surrender value of the policy; (b) to have insurance for the face amount of the policy, less any indebtedness to the company, and to continue in force from the date of default for such term as the cash surrender value would have purchased, as provided in the policy, but without participation and without the right to procure loans or to have the cash surrender value; or (c) to purchase nonparticipating paid-up insurance, payable at the same time and under the same conditions as contained in the policy. The policy contains the following provision: If the insured shall not, within 30 days after default, surrender this policy to the company at the home office, for its cash surrender value, as provided in option (a), or term insurance, as provided in option (b), the cash value, less any indebtedness, will be applied to the purchase of paid-up insurance, as provided in option (c). The insured did not surrender the policy and accept options (a) and (b), and the company, under the third privilege of the option, converted the policy into paid-up insurance, amounting to $114, and, as has been hereinbefore stated, this sum was paid to the respondent as administratrix, and was afterwards tendered back to the company, and the company declined to receive it. The contention of the appellant is that all the clauses of the policy must be construed together (Barron v. Bank, 131 S. C., 441; 128 S. E., 416), that the provisions of the policy must be construed most strongly against the insurer and in favor of the insured (Wheeler v. Insurance Co., 125 S. C., 320; 118 S. E., 609), and, if the policy of insurance can be *52 lawfully saved, this will be done (Scott v. Insurance Co., 102 S. C., 125), 86 S. E., 484. The appellant further contends that the provision permitting the company to convert the policy into paid-up insurance under the third option is unreasonable and void, in the light of the other provisions of the policy. After the policy had lapsed, the insured made application for a reinstatement of the policy. Tie did not apply to have-extended insurance, under option (b), referred to. The company procured D'r. T. H. Dreher, a reputable physician at St. Matthews, to make the physical examination, so that a health certificate might be furnished to the company. Upon making such examination, Dr. Dreher made a higher favorable report as to the condition of the insured. In a letter of March 2, 1922, the company advised the-insured that the health certificate was not found to be satisfactory to its medical department, and declined to reinstate policy No. 16986, and advised the deceased that the value of his paid-up policy at the time of his death would be $114. The appellant claims that this action on the part of the company was a fraud on the rights of the deceased, and that the company had no right to arbitrarily reject the application for reinstatement. The insured had the policy in his possession, and was acquainted with its terms. He had a right to accept either one of the three options which he deemed to -be most beneficial to himself, and declined to make his election; whereupon the respondent exercised the right expressly given it under the terms of the policy, and converted the cash value into paid-up insurance, amounting to $114. The company had no right to exercise this option so long as the option remained to the insured to exercise a different option if he saw fit. After the death of the insured, his personal representative received the money. There is no evidence going to show that there was any fraud or unfair dealing on the part of the company which' prevented the in *53 sured from accepting the option most beneficial to him; nor is there any evidence tending to show that his personal representative, the appellant, was induced by any fraud or unfair dealing to accept tbA $114; nor is there any evidence tending to show that the company had bound itself to abide by, the report which might be made by Dr. Dreher. The fact is so well known that the Court will take judicial notice of, it, that every insurance company has its medical examiners to whom these reports are sent, and that the final action is governed by the advice received from those examiners. As stated, the insured was not applying as a matter of right, to be allowed to open up the default and take one of the different privileges offered by the options, but he was, as a matter of grace, applying to the company for a reinstatement, and the company had a right to accept or decline a reinstatement, and its conduct in this case in no way misled the deceased, and did not cause him to do or forego the doing of any act which was to his prejudice. The rights of both parties were already fixed, and the company did no more than to decline, after investigation, to open up a situation that was already closed. His Honor, therefore, committed no error in directing a verdict for the respondent on this issue, and the judgment on this issue is affirmed. As to policy 16613 : This policy was issued on December 30,-1918, and three premiums were paid. There was some question about a premium for one year having been credited without payment, but that does not enter into the settlement of the case. Under date of November 28, 1922, the insured wrote the company asking for a loan to pay the premium which was to ■fall due on December 30, 1922. The company on December 13, 1922, replied, stating that he owed a balance of $21.17 on the note given for part settlement of the 1921 premium, but that, after the 1922 premium was paid, the loan value *54 of the policy would be $84, and suggested to him that by making this loan and sending on .80 cents additional, he would be able to pay his premium which fell due December 30, 1922, amounting to $56.17. Adding the interest on this note and the loan proposed to be made, and then adding the premium, the total amount was $84.80, so that it took just 80 cents more than the loan value of the policy to finance the premium for another year. In order to complete the transaction, the company inclosed a loan certificate, and instructed the insured how to execute it, and directed him, when executed, to return it with a post office money order for 80 cents, and that he would their owe nothing more on the policy until the next premium due date, December 30, 1923. Had the insured complied with these directions, this issue would not now be before this Court. He did not comply, but on January 22, 1923, he asked the company that the time be extended, and a prompt reply was mailed to him that it could not make any settlement other than that proposed in its letter of December 13, 1922, and he was again urged to execute the loan certificate and return it with 80 cents, not later than January 30, 1923, as the month of grace would expire on that day. On January 29, 1923, the insured inclosed the post office money order for 80 cents “for interest on policy No. 16613.” The insurance company claims that the 80 cents was for part interest on the note for $21.17, and they so applied it, stating, “as directed in Ginyard’s letter.” This Court does not take that view of the transaction. The insured evidently intended to comply with the request of the company, but failed to send in the loan certificate. True, he owed the $21.17 and the interest on it, and was bound in good faith to pay it, but there is no suggestion that he was attempting in making this remittance, to discharge the interest on that sum, or that it was sent to be so received, but it was sent as a part of the means of *55 keeping in force the policy for another year. The insured so understood in sending it, and the company should have so received it. The fact that it was denominated as interest on policy No. 16613 by the sender did not authorize its application to the note for $21.17. It was the sum, over and above $84 necessary to keep his policy in force for another year, and, that being the loan value of the policy, the question should have been submitted to the jury, whether by receiving and retaining the 80 cents, the company intended to waive the requirement of a loan certificate being sent in, and as to the merits of which we express no opinion. We simply hold that there was some evidence of waiver, and the issue should have been passed upon by the jury, and there was error on the part of his Honor in directing a verdict. The judgment as to this issue is reversed, and the case is remanded to the Circuit Court for a new trial as to this cause of action. New trial granted as to this cause of action. Messrs. Justices Watts and Marion and Mr. Acting Associate Justice C. J. Ramage concur.